CEO of Natixis, in charge of Corporate & Investment Banking, Natixis (Natixis Corporate & Investment Banking)
NATIXIS CIB INFRADAY 2024 - Introduction by Mohamed Kallala, Global Head of Natixis CIB
About Mohamed Kallala
At the 13th edition of Natixis Infraday in November 2024, Mohamed Kallala noted the need for more liquidity providers beyond banks and markets to address infrastructure investment requirements, stating that Europe must invest 800 billion euros annually, with 80% going to infrastructure. He remarked that governments are focused on providing relevant infrastructure to handle energy, renewable energy, data centers, and the digitalization of the economy. Kallala also described Natixis's strategy of acquiring controlling stakes in boutique advisory firms, citing recent additions in Belgium and the Netherlands. At the second edition of the private debt forum in September 2023, Kallala said private debt "covers almost everything" except equity and that Natixis CIB differentiates itself by keeping a significant portion of its underwriting on its balance sheet, which he described as a key difference from U.S. banks. He projected double-digit growth in private debt asset management over the following five years, while noting that raising new funds has become more difficult due to a decrease in the value of listed assets following a sharp increase in interest rates.
Transcript (13 segments)
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Christina Balanos0:21
Ladies and gentlemen, hello and welcome to this 13th edition of Natixis Infraday. We're very happy to have so many people here. I'm Christina Balanos, and I'm delighted to be presenting this event for you today. We have a very exciting program including interviews and panel discussions with experts from around the world. To launch this edition, please welcome the global head of Natixis, Mohamed Kallala.
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Mohamed Kallala1:05
Thank you, Christina. Hello to you. Thank you very much for being with us. How do you feel with so many people here today? Actually, I'm really amazed. Thank you for having me. Last year we had this event, and I think next year we need to book the Stade de France, or if you want to be more global, Madison Square Garden or Maracanã in Brazil. We need to think about where to organize it next year. I'm really happy to have the 300 issuers and investors with us in the infra world, and I'm proud of the quality of the panels. I saw the names and the exchanges—amazing. So thank you.
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Christina Balanos1:51
So can we say that Natixis is a leader in the infrastructure sector?
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Mohamed Kallala2:00
Good question, Christina. We like to say we are a leader and we do our best, but it's up to the client to decide. The journey in the infrastructure sector started 40 or 50 years ago when we were a subsidiary of a state-owned company with a strong balance sheet and cheap cost of liquidity. We started lending to long-term projects. Over time we developed expertise beyond lending—understanding the actors and business models, hedging not just financial products but critical metals and energy prices. Over the last 10 years we have seen more diverse financing for the same project. I'm proud of two transactions this year: a hospital in the US where we provided 100% underwriting on $800 million debt, financed through infrastructure rather than real estate; and a transaction in Italy with KKR where we provided €2 billion, leveraging our infra expertise in what was nominally a corporate loan. In M&A, we started 12 years ago buying boutiques, like Adur in Australia, Solon Partners in the US, and recently Tund and Endo in Belgium and the Netherlands. We integrate infrastructure as a key M&A business line across our boutiques. Overall we aim to have the best understanding of infrastructure business models to help our clients.
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Christina Balanos7:36
And tell us, in your view, is the macroeconomic environment shaping infrastructure investments?
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Mohamed Kallala7:45
It's a very good question—my supervisory board asks me the same about all of Natixis. We are a 200-year-old institution, and while the geopolitical environment is challenging, we think we will behave appropriately. Infrastructure is a key driver for all economies. Governments are thinking about how to provide relevant infrastructure to handle energy, renewables, data centers, AI, and an aging population requiring healthcare assets. So yes, infrastructure is at the heart of global changes. If you don't invest today, your economy will not be relevant in 10 to 20 years.
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Christina Balanos9:30
And what about innovative financing solutions that Natixis is exploring to support infrastructure developments?
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Mohamed Kallala9:40
Honestly, my teams ask me about innovation. As a lender, I'm prudent. We think about security packages and cash flows, but if we only lend to plain vanilla projects, we don't accompany the best equity. We spend time with clients to understand emerging sectors. We were one of the first banks to finance battery storage, but we spent a lot of time understanding battery costs and residual value. When it's risky, we need to innovate on the financial side—trenching, preferred equity, secure structures—to address the right risk-reward pockets. We do this in private debt and also in the market with bonds, USPPs, and CLOs. The name of the game at Natixis is to be expert in different pockets and give clients the best solutions.
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Christina Balanos12:23
What does it mean exactly that the infrastructure world needs to tap into all available liquidity sources at Natixis, and that all business lines collaborate to product offerings?
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Mohamed Kallala12:30
The need to invest in infrastructure is surging. The Draghi report two months ago said Europe needs to invest 800 billion euros a year on top of current investment, mainly in infrastructure. We need to find the cash. There's not enough bank balance sheets. We need to tap savings and the bond market. Fortunately, infrastructure offers a relevant risk profile for fixed-income investors. So yes, we need to tap other pockets to fuel these investments. For Europe it's 800 billion, for Asia excluding China it's over 2 trillion annually. This puts pressure on selectivity, but with government sponsorship, projects can be financed.
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Christina Balanos14:21
Great. Any final words? We're almost out of time.
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Mohamed Kallala14:28
Honestly, I'm really proud to have you all here. I'm proud of what my teams are doing—it's going to cost me a lot, but that's another story. Thank you for what you're teaching us. We learn from you, from other lenders, from equity investors, from regulators. This is what we want to continue doing. Thank you and see you next year—maybe it won't be in France.
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Christina Balanos14:59
Thank you, Mohamed. Thank you.